Observations by an academic researcher on the use of “open”-ness as a competitive strategy, with a particular interest in coping with the commoditization of information goods and technologies in an Internet-enabled world.

Monday, February 4, 2008

I got home Sunday and got caught up with the Merc. The first story that grabbed my eye was Dean Takahashi’s sidebar Saturday on the MS-Yahoo merger:

Microsoft may finally become a Silicon Valley company.

It has always been the beast from Redmond. An outsider. The inspiration for many a Silicon Valley start-up in the negative sense - everybody here wants to get rid of the company or go around it.

Microsoft's bid for Yahoo fits into a strategy that has been a long time in the making. It for years has been trying to be a player in Silicon Valley.

Once upon a time, Microsoft was at war with the valley. Companies like Netscape were key players in the antitrust case against it. To patch things up, Microsoft executives Bill Gates and Steve Ballmer made regular diplomatic missions to the valley, where the company has a 32-acre campus in Mountain View. "Let us be your friend," was their message.

Takahashi notes that the campus dates to Microsoft’s [1997] acquisition of WebTV.

Microsoft has been making nice with SV for years, dating back to at least 2000. Of course, the 1990s were mainly about Silicon Valley firms ganging up on Microsoft — or at least perpetual enemies like Scott McNealy’s Sun Microsystems. (Microsoft has since buried many of these hatchets). And beyond the few enemies many ISVs who needed to work with Microsoft to support the world’s most popular software platform — even though it had a habit of competing with its ISVs if the segmnent was large enough.

One thing that people forget is that Microsoft came to the Valley 20 years ago, with the July 1987 acquisition of Forethought. The Sunnyvale company invented something called “desktop presentations” with a new software package for the Mac. I remember visiting the Forethought (then “Microsoft Graphics Business Unit”) engineers in 1988, so that we could make our HP PaintJet printer driver compatible with their software.